RIYADH - Saudi Oil Minister Ali al-Naimi said today that current oil prices were "reasonable" and were not having a big negative impact on global economic growth.
This is the first time Naimi described the prices as reasonable since oil dropped from a peak of US$78.40 ($119.65) in mid-July.
"Theoil industry is convinced that this price is reasonable," Naimi told reporters in Riyadh. "Prices now are rewarding to both producers and consumers and their impact on the global economy is small," he added.
Oil prices slumped more than 3 per cent to their lowest levels in almost six months on Tuesday, weighed down by profit-taking and brimming winter fuel supplies.
With oil having fallen heavily on Tuesday, Opec's basket price for crude will drop to around US$57.
Saudi Arabia has not specified a price target that it would defend, but Iran's oil minister has said he would like to see the basket remain above US$60.
"The most important gauge for this price is that it does not have a big negative impact on the global economy," he said.
"I believe that the oil industry is benefiting from these prices in exploration to produce additional amounts for the international market," said Naimi.
Earlier on Tuesday, Opec President Edmund Daukoru said a short-term drop in the price of oil would not trigger a major review of Opec's output quotas, adding that he was confident that the oil market would firm as winter approached.
Naimi, speaking on the sidelines of an environmental conference in Riyadh, said decreased demand has led to lower pumping rates but that his country's output had not fallen under 9.1 million barrels per day (bpd).
"The output of the kingdom had not fallen under 9.1 million barrels per day," he said. "You cannot produce an amount without a client to buy it. This is the reason behind the decline in production."
Supply from Opec's biggest producer has risen steadily since May, when Riyadh slowed output to 8.93 million bpd to meet lower demand from refiners who shut units for seasonal maintenance. Prior to then, the kingdom had produced close to 9.5 million bpd.
Earlier this month Naimi said Saudi is expected to produce 9.1-9.2 million bpd in September, noting that this is not a final figure.
